What is the forward price of gold

Assignment Help Business Management
Reference no: EM131199032

The current price of gold is $1,600 per troy ounce. There are no storage costs. The risk free rate of interest is 5% continuously compounded.

Please help me with the answers for all the questions.

(a) What is the forward price of gold with delivery in 3 months?

(b) Calculate the cost of a collar, with 3 months to delivery, where the strike of all options used is 1620.126. The annual standard deviation of the gold price is 20%.

(c) Compare the two hedging strategies based on your answer in (a) and (b).

Reference no: EM131199032

Questions Cloud

What would you say if you were the professor : Might Wilson's failing the quiz have anything to do with the price of parking? Explain your answer.
Net proceeds from the sale of a bond : What are the net proceeds from the sale of a bond? What are flotation costs, and how do they affect a bond's net proceeds?
Draw jackies budget constraints in given cases : Draw Jackie's budget constraints in each of these two cases. - Draw representative indifference curves that would reflect each of these scenarios: - Jackie prefers program A to program B.
Compares alternative techniques for supply restriction : An alternative approach (followed today for tobacco and alcohol) is to tax the goods heavily. Using the tax apparatus developed in Chapter 4, show how this reduces the total income of the suppliers in the drug industry.
What is the forward price of gold : (a) What is the forward price of gold with delivery in 3 months? (b) Calculate the cost of a collar, with 3 months to delivery, where the strike of all options used is 1620.126. The annual standard deviation of the gold price is 20%. (c) Compare th..
Analyze whether or not company should continue manufacturing : Analyze whether or not the company should continue manufacturing in Canada or if it should move back to the United States. This requires research into transportation cost estimates from Colorado to Toronto.
How is monetary policy useful if money is neutral : Discuss the statement "Because neither fiscal nor mon- etary policy can affect the natural level of output, it follows that, in the medium run, the natural level of output is in- dependent of all government policies."
Globalization has failed in every respect : Globalization has failed in every respect. Brexit is a clear sign that the integration of financial markets will now be unwound. What is your view of this statement? Justify your opinion.
Which group of families should be particularly sensitive : Which group of families should be particularly sensitive to the introduction of these time limits: those with younger children or those with older children? Explain your answer.

Reviews

Write a Review

Business Management Questions & Answers

  What formula or function does he put

Remember Bill? He was the gentleman that you helpedto start up his business. Well his business is doing well, but he has come to you with some questions and concerns. What formula or function does he put in Column F that will show the total expense..

  External events for a businesschoose a specific industry or

external events for a businesschoose a specific industry or large business in your area. what do you think are some of

  Prepare proposal on how to improve interlude ttdis patronage

Reasearch Methodology- Prepare a research proposal on how to improve Interlude TTDI's patronage and marketing scheme.

  Food and beverage industry

Food and Beverage Industry - What complaints arise in a food and beverage operation? How are these complaints handled? Who handles them?

  Why do you think that is the case

Why do you think that is the case? Might Americans image in this regard be improved on? How?

  Cause of the political conflict causing separatism

Write a 1-2 page paper that outlines the cause of the political conflict causing separatism (separatists) in the Ukraine from the separatist point of view.  Provide the key sides or opposing viewpoints of the conflict from a Separatists point of v..

  Explain if a company only sells its products from a website

Explain If a company only sells its products from a website and which is accessible over the internet to customers from all over the world

  Potluck lunch once in a month

Betty, working for Creative Minds? Advertising, decided with a few of her colleagues to have a potluck lunch once in a month. This is an example of? ________.

  Public budgetingexplain standardization and specification

public budgetingexplain standardization and specification and explain how they impact the purchasing process amp list

  Market rate of interest on similar bonds is eight percent

Ace Apparel, Inc., a manufacturer, has just issued $1,000,000 principal amount of bonds with a six percent semi annual coupon and a maturity of twenty years. The market rate of interest on similar bonds is eight percent (compounded semi annually)

  Senior management to help identify a new region

As the Manager of Strategic Planning for this company you have been requested by senior management to help identify a new region in which to offer your company's services

  Importance of time management for leadershow important is

importance of time management for leadershow important is time management for leaders and management?what are some good

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd